m


V Executive Summary
V Introduction
V Company profile
V Major Milestones
V Notables
V Literature Review
V Formula & Solution
V Conclusion
V Respondents
V Bibliography
V Questionnaire
V ur live project is based on the inventory of Big Bazaar, Sector
18, Noida. We, a team of 8 dedicated individual, made the project
a worthwhile experience for all of us as a part of partial
fulfilment of our PGDM degree. 3 of our team mates went to
´The Great Indian Placeµ on the 8th March, 2010 to collect the
necessary information regarding the inventory of the retail giant.

V We collected some necessary information from 3 Big Bazaar

officials. They were highly co-operative and friendly. By
gathering the information we made some calculations regarding
the project to find out the maximum inventory, cycle time etc.

V Hopefully our study will make this observation worthwhile and

with the continuous effort we can make our team cohesiveness
greater than it was ever before.
V ãou are in trouble if you have to keep telling customers,
"I'm sorry we're out of that size. May we order it for
you?" Even though the shirts are selling briskly, you will
lose customers if you don't have an item in stock.
When the customer spends, you have got to be ready with
the goods. This is what inventory management is all about.

V In many retail and wholesale operations, the single largest

asset is inventory. Control of this investment is vital. It
will eliminate a number of the problems associated with
capital shortages and will also provide capital to permit
expansion of operations for increased sales and profit.
V Pantaloons Retail (India) Limited, is India·s leading retailer that operates
multiple retail formats in both the value and lifestyle segment of the Indian
consumer market. Headquartered in Mumbai (Bombay), the company
operates over 10 million square feet of retail space, has over1000 stores
across 61 cities in India and employs over 30,000 people

V The company·s leading formats include Pantaloons, a chain of fashion

outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a
supermarket chain, blends the look, touch hand feel of Indian bazaars with
aspects of modern retail like choice, convenience and quality and Central, a
chain of seamless destination malls. Some of its other formats include,
Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion Station, ALL, Top
10, mBazaar and Star and Sitara.

V The company also operates an online portal, futurebazaar.com. A subsidiary

company ,Home Solutions Retail (India) Limited, operates Home Town, a
large-format home solutions store, Collection , selling home furniture
products and E-Zone focused on catering to the consumer electronics
segment
V Pantaloons Retail was recently awarded the
International Retailer of the ãear 2007 by the US
based National Retail Federation(NRF) and the
Emerging Market Retailer of the ãear 2007 at the
World Retail Congress held in Barcelona
V Pantaloons Retail is the flagship company of Future
Group, a business group catering to the entire
Indian consumption space.
V Future Group is one of the country·s leading business groups
present in retail, asset management, consumer finance,
insurance, retail media, retail spaces and logistics. The group·s
flagship company, Pantaloons Retail (India) Limited operates
over 10 million square feet of retail space, has over 1,000
stores and employs over 30,000 people. Future Group is present
in 61 cities and 65 rural locations in India. Some of its leading
retail formats include, Pantaloons, Big Bazaar, Central, Food
Bazaar, Home Town, eZone, Depot, Future Money and online
retail format, futurebazaar.com.

V Future Group companies includes, Future Capital Holdings,

Future Generali India Indus League Clothing and Galaxy
Entertainment that manages Sports Bar, Brew Bar and Bowling
Co. Future Capital Holdings, the group·s financial arm, focuses
on asset management and consumer credit.
V Type: Subsidiary of Pantaloon Group
V Founded: 2001
V Headquarters: Jogeshwari, Mumbai, India
V Industry: Retail
V Products Department store
V Parent: Future Group
V Website http://www.bigbazaar.com/
V ˜
˜ is a chain of hypermarkets in India, with more than 100
stores in operation. It is a subsidiary of Pantaloon Retail India
Ltd's, Future Group, and follows the business model of United
States-based Wal-Mart.
V hypeet is a superstore which combines a supermarket and a
department store. The result is a very large retail facility which
carries an enormous range of products under one roof, including full
lines of groceries and general merchandise. In theory,
hypermarkets allow customers to satisfy all their routine weekly
shopping needs in one trip.
V 1987 - Company incorporated as Manz Wear Private Limited.
Launch of Pantaloons trouser, India·s first formal trouser brand.

V 1991 - Launch of BARE, the Indian jeans brand.

V 1992 - Initial public offer (IP) was made in the month of May.

V 1994 - The Pantaloons Shoppe ² exclusive menswear store in

franchisee format launched across the nation. The company starts
the distribution of branded garments through multi-brand retail
outlets across the nation.

V 1995 - John Miller ² Formal shirt brand launched.

V 1997 - Pantaloons ² India·s family store launched in Kolkata.

V 2001 Big Bazaar, ¶Is se sasta aur accha kahi nahin· - India·s first
Hypermarket chain launched.

V 2002 Food Bazaar, the supermarket chain is launched.

V 2004 Central ² ¶Shop, Eat, Celebrate in the Heart of ur City· ²

India·s first seamless mall is launched in Bangalore.

V 2005 Fashion Station - the popular fashion chain is launched aLL

² ¶a little larger· - exclusive stores for plus-size individuals
is launched

V 2006 Future Capital Holdings, the company·s financial arm

launches real estate funds Kshitij and Horizon and private
equity fund Indivision. Plans foraysinto insurance and
consumer credit.

Multiple retail formats including Collection i, Furniture

Bazaar, Shoe factory, E Zone, Depot and futurebazaar.com
are launched across the nation.

Group enters into joint venture agreements with ETAM

Group and Generali.
V Product categories in Big Bazaar

V Location of Big Bazaar

V Types of inventories maintained.

V Decision of how inventories are maintained

V Reorder points of inventories

V Uncertain demands of customers

V Supply chain of perishable and imperishable goods

V Area of Maintenance

V Quality of Food-items
V Introduction to inventory:
An inventory can be defined as a stock of goods which is held for
the purpose of future production or sales. The stock of goods may
be kept in the following forms:

1. Raw Materials
2. Partly finished goods
3. Finished goods
4. Spare parts etc.

The objective of an inventory problem is to minimize the total

(actual or expected) cost or to maximize (actual or expected)
profit.
V Variables in an inventory problem :
The variables associated with the inventory problems are
classified into two categories.

î The Controlled variables

î The uncontrolled variables
V O
t V e
(or the costs) involved in Inventory
Problems:
 Holding or storage cost
 Set up (or replacement or ordering) cost

V Besides these cost variables there are other

variables that y n t e c nt ed in an
inventory problem:
 Demand
 Lead Time
 Amount Delivered

V ieed  nvent y:

 To decrease the setup and shortage costs.
 To meet demand on time to earn goodwill.
 For smooth running of the business.
V The economics of production with the large run sizes
sizes..

V The smooth and efficient running of the business.

business.

V The economics in transportation

transportation..

V The advantage of price discounts by bulk purchasing

purchasing..

V Faster and adequate service to the customers and,

V Profit from speculation in the market where price are

expected to rise
rise..
V Ware house rent.
V Interest on invested capital.
V Physical handling.
V Accounting.
V Depreciation and determination.
V Classification and Categories of
Inventory Models:
Ú e
ene n tt n
u
ed n nvent y  de
:

V r = Demand rate.
V K = Production rate.
V C = Average total cost per unit time.
V t = Time interval between two consecutive replenishments of
inventory.
V z = rder level or stock level use the following general notations in
inventory models:
V I = the cost of carrying one rupee in inventory for a unit time.
V C1 = Holding cost per unit time.
V C2 = Storage cost per unit time.
V C3 = Set up cost per production run.
V q = Lot size per production run. (I.e. The quantity produced per pro
V L = lead time.
V q*, t*, z* = ptimal values of q, t, z respectively for which the cost C
is minimum.
After communicating with the respondents we found the
following average results:

Q1) What is the store capacity of your warehouse?

=> 45000 units
Q2) What is the annual demand?
=> 400000 units
Q3) What is the average carrying cost to carry the inventory?
=> >10%
Q4) What is the setup cost of the inventory?
=> Rs.4000
Q5) What is the average lead time?
=> 3days
Q6) What is the ordering cost to place an order of 1 unit?
=> Rs.4
Ú e p tnt  u
t
ve
V
V
V It has been a great experience focussing on the live
project of Management Science Decision Making (MSDM).
ur place of interest was the retail giant Big Bazaar. We
found great support in the shop in Noida. We have found
that Big Bazaar·s inventory is well equipped and their cost
is under their control due to the short cycle time of
ordering and buffering. Their inventory cost is very high
because of their stocking of various products. Their
product range varying from mere Rs.5 to Rs.50,000.
Hence their range satisfies one and all.

V In future their inventory is well equipped if it sees any

fundamental changes on the demand of the products, be
it desired or undesired. Their inventory is quickly refilled
which is one of their strengths and also they take less
than a day to fully make their inventory a wide spectrum.
˜ 
c n
uted w th:

V Introduction to operation Research By Hamdy A.Taha

V Introduction of operation Research By J.K.Sharma
V Learning operation Research By S.K Jaiswal

ïe
te v
ted:

V www.futurebazaar.futuregroup.com
V www.wikipedia.org/inventory
V www.pdfsearchengine.com/inventory
V www.scribd.com
V m
ten ˜n
 (Store manager, Big
Bazaar)

V m Úudh  Gn
uy (Asst. merchandising

officer, Big Bazaar)

V m  
d (Floor Manager, Big Bazaar)

 rue
t nn e
V Q1) What is the store capacity of your warehouse?
i) >15000 units ii) >25000 units iii) >35000 units iv) >45000 units

V Q2) What is the annual demand?

i) >100000 units ii) >200000 units iii) >300000 units iv) >400000 units

V Q3) What is the average carrying cost to carry the inventory?

i) >10% ii) >20% iii) >30% iv) >40%

V Q4) What is the setup cost of the inventory?

i) > Rs1000 ii) > Rs2000 iii) > Rs3000 iv) > Rs4000

V Q5) What is the average lead time?

i) >3 days ii) >5days iii) >7days iv) >9days

V Q6) What is the ordering cost to place an order of 1 unit?

i) > Rs2 ii) > Rs3 iii) > Rs4 iii) > Rs5